Martin Schulz, Team Leader Growth International at Federated Hermes.
What international markets look most attractive?
We believe that most markets outside the U.S. will actually be the biggest beneficiaries. But in specific, the emerging markets. So on the one hand, the laggards, the ones that were really the COVID laggards, so to speak, will probably do very well. But in the emerging markets in particular, with U.S. dollar weakness, with the global synchronized economic recovery in play, those companies and countries that have commodity-based structures will do very well. From our perspective, we believe that Asia will continue to do well. In particular, Southeast Asia, such as South Korea. But other places that have been laggards, so to speak, in Eastern Europe, in Latin America, places like Brazil will actually do very, very well. And so again, from our perspective, the U.S. has been that shining star on the hill here recently, but with dollar weakness and with valuations at their levels that we haven't seen in 20 plus years, we expect the international markets to do much better.
Do you expect international equities to outperform U.S. equities?
The U.S. will continue to do well. But relatively speaking, the international markets will be in a new phase, so to speak. And, you know, the last time we saw, particularly in emerging markets recovery, was about 10 years ago. We expect to see that going forward now. The international markets are cheaper. They have better tailwinds. And they have also a scenario now where they're going to catch up to where the U.S. has been. And so, the emerging markets in particular, but all of the markets outside the U.S., will do well as the U.S. dollar recedes in terms of its value. And as the focus, if you will, becomes on the globalization and on global economic recovery, as opposed to risk off. So it's going to be risk on. So we expect emerging markets and developed markets to do very, very well.
Disclosure: Views are as of the Nov. 13, 2020 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. International investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards. Prices of emerging markets securities can be significantly more volatile than the prices of securities in developed countries and currency risk and political risks are accentuated in emerging markets. Past performance is no guarantee of future results. Federated Global Investment Management Corp. (11/20) 20-40553